NRI couple buys back own firm for $1.9-B profit

By siliconindia staff writer   |   Tuesday, 17 February 2004, 08:00 Hrs
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BANGALORE: Buy low and sell high. That’s the traditional logic. How about sell high and buy low, real low? Especially a company. That’s exactly what Valley-based Ajay Shah has done, reports Economic Times.

Shah and his wife Lata Krishnan, who is now president of America India Foundation, had sold their company — SMART Modular — to the $11-bn Solectron at the height of the dotcom boom for $2bn in ’99. Last week, Solectron announced that it was selling SMART Modular Technologies business back to Ajay Shah and a couple of other investors for a mere $100m. One-twentieth of the price in less than five years.

The Milpitas, California-based Solectron, is a provider of electronic manufacturing and integrated supply chain management services. SMART Modular, based in Fremont, California is a manufacturer of memory and communications products for the computing, networking and telecommunications industries. SMART Modular was founded by Shah and Krishnan in ’89 with another partner. When it was sold a decade later to Solectron it had revenues of about $1bn with some 2,000 people. The company had once made it to Fortune Magazine's list of 100 fastest growing public companies.

After the sale of SMART Modular, Krishnan became active in community services, and is today the president of the high profile America India Foundation which has McKinsey’s Rajat Gupta and Citigroup’s Victor Menezes as chairpersons. Shah and Krishnan are said to be part of the charmed Indian inner-circle of former US president Bill Clinton in the US.

When contacted, Ajay Shah declined to comment. ¬ďAt this time, the only comment available regarding this announced transaction will come from Solectron,¬Ē he said. Solectron has said that it has sold SMART Modular Technologies, and its other affiliated companies to Texas Pacific Group, Francisco Partners and Shah Management (which is owned by Ajay Shah) for about $100m in cash. The first deal ¬ó when Solectron had shelled out $2bn for the same company ¬ó was a stock transaction.

Solectron has also said that it will retain SMART Modular’s Aguadilla and Mayaguez, Puerto Rico, sites that perform electronics assembly services. According to Solectron, this divestment is part of the company’s stated plan to sell certain assets that are not central to the company’s future strategy.

Texas Pacific Group, founded in ’93 and based in San Francisco, California, London and Fort Worth, Texas, is a private investment partnership managing over $13bn in assets. Francisco Partners, with $2.5bn of committed capital, is a technology-focused private equity fund

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